I don't think that Holly cheated on Michael in the strictest sense of the term. Her flirtatiousness might call her commitment into question. Based on the show alone, Holly appears fickle, wanting the attention of any and all guys. Her conversation with Melissa speaks loudly of her view: she'll flirt with any guy who isn't in a serious relationship. Based solely on his edit, Michael appears to be this lovesick guy who cares more about loving Holly than the money. Maybe this whole thing is strategy?
Edits aside, the comments made by people who truly know Holly and Michael round out the perspective. I've yet to hear a negative thing said by any guy or girl about Michael, from Bachelorette to Bachelor Pad to Bachelorette Beatdown participants. As for Holly, it's not all roses though most of those comments come from her ex-boyfriend, Jesse C., and his friends. Natalie tries to remain Switzerland but makes it clear that Holly was the one who broke up with Michael. Deanna and Tenley, girls with whom Holly was very close, seem to have limited interaction with her now.
To me, Holly seems like a nice, fun person who just isn't sure what she wants, except that she doesn't want to settle down. The cycling through Bachelor-related guys is interesting. She's now been involved with four guys connected to that show. Why?